This earnings season, expect companies to keep margins high 'the usual way, by firing people'

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When companies report second-quarter earnings this week, it’ll be something of a moment of truth for the economy.

Lockdowns left shoppers burning stimulus cash on AirPods and Nintendo Switches to dilute boredom and anxiety. Supply convulsions from the war in Ukraine rerouted spending from things to pass the time to things, like groceries, that were needed to survive.Lockdowns left shoppers burning stimulus cash on AirPods and Nintendo Switches to dilute boredom and anxiety.

“It keeps getting disproved by the actual numbers,” Sheraz Mian, director of research at Zacks, said of the recession forecasts. “The bears keep pushing it out to the next quarter and the next quarter. “So the biggest thing I’ll be watching out for is whether we are in the same kind of trend line we’ve been seeing the last few quarters or if things really are weakening.”Q2 Earnings, Delta, JPMorgan For companies in the S&P 500 index overall, FactSet forecasts a 7.

“While the Airlines have sounded extremely confident on demand all year, their visibility / confidence has only extended as far as the summer,” the analysts said in a research note. “However, we will now start to get our first glimpses into what the fall booking curve looks like, which is important to fend off the demand bear case.”

“The main driver on top of easy comparisons will be AI,” she said. “This is really the biggest theme in our portfolio right now.” Put another way, of the $15.45 trillion in sales that those 500 companies put up last year, $1.87 trillion went straight to profits. Every 0.1% of the S&P 500’s margins in 2023 added $1.87 billion to those businesses’ bank accounts.

Efforts by executives to repeat the abnormal gains for investors through a formula of price hikes and layoffs represent a multi-pronged threat for already-struggling consumers: The prospect of losing a job, yet still having to pay up at checkout, even if weaker demand overall nudges the nation into a downturn.

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